Handling late paying clients

Your company is doing well, and bringing in new clients. But even if business looks good on paper, one problem can prevent your company from thriving – a lack of cash. Being paid on time ensures that your cash flow remains healthy. Although a majority of clients will pay without a problem, there are occasions where you can encounter difficulty with unpaid invoices.
Whether you have been in business for a while or you are a new startup, there are multiple ways you can cope with clients who pay late. Knowing how to deal with late-paying customers can be the difference between your company growing and moving forward and having to shut its doors.
Before you can figure out how to get late-paying clients to pay on time, it helps to figure out who is paying late. One way to keep track of those who pay late is to make a note on their files when they make a late payment.
Another way to identify late-paying clients is to create a list of late payers each quarter. Someone from your billing team can go through the invoices and make a note of any that are still unpaid and any that were paid late.
Waiting until the end of the quarter to review who has been paying late — or who has not been paying at all — can mean a considerable amount of work for your team. It can also mean you miss out on a fair amount of money over that time, as you will not necessarily catch late payers or customers of concern early on.
Combining the two methods — notating each late payment and how many late payments a customer makes and making a master list each quarter — can offer you the best of both worlds. You would be able to identify customers who might be costing your company a lot and decide to stop working with them before it is too costly. Additionally, seeing the big picture each quarter can help you determine whether or not late payment is a company-wide problem or limited to a few customers only.
For help with all of your financial needs, GKM is here to help. Our team is always here to provide support whenever necessary. To speak to a member of the team, simply email info@gkmtax.com.